The High Court has today made its ruling in the highly anticipated test case taken by a number of publicans against FBD Insurance. The publicans sought to rely on business disruption insurance polices which FBD argued did not cover them for losses arising from the Covid-19 pandemic.
In what is a landmark decision, Mr Justice Denis McDonald found that a policy sold by FBD covered losses sustained by the pubs having to close due to Covid-19. The decision follows a similar ruling made in January by the UK Supreme Court. The outcome of this case has implication for 1,000’s of Irish businesses affected by Covid-19 lockdown closures.
The FBD insurance policy states that it covers losses where a premises is closed under the orders of a local or government authority in the event of “outbreaks of contagious or infectious diseases on the premises or within 25 miles of the same”. It however does not list diseases. FBD argued that the closures were not due to an outbreak of disease at the premises or within 25 miles of them. FBD refused compensation on grounds that the closures happened because of a national situation which was not covered under the insurance policy.
In a lengthy and detailed judgment delivered this Friday, Mr Justice Denis McDonald disagreed with FBD’s interpretation of its policy and said cover is not lost where the closure is prompted by nationwide outbreaks of disease provided there is an outbreak within the 25-mile radius and that outbreak is one of the causes of the business closure. Such outbreaks were a cause of the closure of the pubs announced by the Government on 15 March last year. The fact that closures outside the 25 mile radius were also causes of the decision did not alter that conclusion.
FBD had set aside €30 million to cover any costs arising from the outcome of the case, should it now go in tis favour. The Judge ruled the issue of quantifying the losses suffered by the publicans will be dealt with at a later date. The case is back before the High Court on 17 February.